2015 Stock Picking Contest — Thank God That’s Over

I’m not going to bury the lede. 2015 was not a good year to be a stock picker.

Canadian markets ended the year soundly in the red, falling more than 10%. Toronto was weighed down by practically everything, but energy, gold, and materials really brought down the index. This is of no surprise to the readers from Alberta, AKA the land of SWEET JESUS I NEED A JOB.

American markets were decidedly better, only falling marginally over the year. But even that didn’t tell the whole picture. Stocks like Facebook, Google (nope, not calling it Alphabet), and Netflix soared, while everything else tanked. I read those three stocks collectively added $500 billion to their market caps, while the rest of the market lost $500 billion. Not sure if that’s true, but close enough. The U.S. market would have been almost as bad as Canada’s if it wasn’t for some of the high-flyers.

Even though some of us PF bloggers (okay, just me) might seem all smart and whatnot, we got crushed in 2015. Part of that is the nature of this contest, of course. I actively encourage participants to swing for the fences. Good dividend-paying blue chip stocks are the key to getting rich. They are not the key to winning a contest like this one.

When we last left the contest, Don’t Quit Your Day Job had a seemingly insurmountable lead. Could he hang on, or would YOUR BOY Nelson come back from last place to overtake him? Allow me to present the results in a pretty table form, along with my witty somewhat entertaining commentary underneath.

Poor Mark from My Own Advisor. Each year I make fun of his solid dividend-paying picks for being boring. This time around Mark decided to get a little frisky and pick three energy names (Baytex, Kinder Morgan, and Canadian Oil Sands). These picks did not work out, with each falling an average of 50%.

The worst pick of the contest was Lightstream Resources (held by Doug and Holy Potato, down 78%), followed by Winnipeg Free Press (held by me, down 76%), followed by Baytex Energy (held by Money Propeller, My Own Advisor, and Doug again, down 72%). Other terrible performers were Penn West (down 50%) and Pengrowth Energy (down 67.5%)

Vanessa’s picks were the Russian ETF (up 3.7%), the Russian Small-Cap ETF (down 1.9%), the S&P 500 ETF (up 1.2%) and Suncor (up 5%). She wins the award of the most boring picks, which is not something I would have predicted at this point last year.

The best picks of the contest were gun maker Sturm, Ruger and Co. (chosen by 101 Centavos, up 75%), Credit Acceptance Corp (chosen by Don’t Quit Your Day Job, up 57%), and Valero Energy (Don’t Quit Your Day Job again, up 47%).

My Own Advisor was the only contestant who ended up with all four picks negative. Several of us almost joined him. Village Farms ended the year unchanged for me. Freedom 35 Blog had BlackBerry (up 0.8%) to go with his three losing picks. And Money Propeller’s all energy portfolio didn’t work out with the exception of Suncor, which had a total return of 5%.

And that’s all I’ve got. Congrats to Don’t Quit Your Day Job, whose prize of me totally not kicking him in the ribcage is in the mail.

Interesting results: half beat the index, and half under-performed. This is probably consistent with Mutual Fund account managers and other investment advisers. In my opinion these results support the argument for index investing through ETFs; boring, yes, but more comfortable than high volatility.

Collectively you may have “hammered” the market in 2016 with a aggregate 30% return, sure, but of 14 participants 7 had returns of 16% or less, 1 at 19% and 6 at 24% or more, pulling up the aggregate. TSX Composite growth was 20%, S&P 500 “only” 12%, but that is not the best US index follow for growth, there should also be some Russel 2000 at 19% growth plus dividends. Again only half the entries beat the market.

It’s all about risk and return at the end of the day. I am hopefully 5 years from retirement, so now have less tolerance for volatility. I’d rather bet on a combination of indexes than a fund manager who has a 50% chance of losing to the indexes.

But if I was playing for the competition rather than investing, I would definitely pick some high risk high potential stock to give myself a chance of winning, rather than picking indexes to end up safely in the middle of the field.